When a Reverse Mortgage Is Called Due Over Taxes, Insurance or Occupancy
Most reverse mortgages in the United States are FHA-insured Home Equity Conversion Mortgages, known as HECMs. While the borrower is living, the loan can still come due if property charges go unpaid or the home stops being the borrower's main residence.
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How a living borrower ends up with a loan called due
A HECM does not require monthly principal and interest payments, which leads many borrowers to think nothing can go wrong. The loan documents still require the borrower to keep paying property charges, live in the home as a principal residence and keep it in reasonable repair. Falling short on those obligations is sometimes called a technical default. This page covers that situation only. A loan that comes due because the last borrower has died is a different process with different rules for heirs and surviving spouses, and it is not what we discuss here.
Unpaid property taxes or homeowners insurance
If the borrower does not pay property taxes or hazard insurance and there are no remaining loan funds the servicer can use to cover them, HUD rules allow the servicer, with HUD approval, to call the loan due and payable. The servicer will often advance the money to protect the home and then add it to the loan balance. Depending on the property, HOA or condominium dues can be treated as property charges too.
Moving out or a long absence
A HECM generally comes due when the home is no longer the borrower's principal residence, or when the borrower has not lived there for twelve consecutive months for health reasons, such as an extended stay in a care facility. Servicers verify occupancy with an annual certification. Missing that form can trigger letters and questions, so returning it on time matters.
In Clark County, property tax bills come from the County Treasurer, and insurance renewals come from your carrier, so a lapse can start in two different places. If a family member helps with finances, it can be worth asking the servicer how to authorize them to receive information about the loan. That small step often prevents a missed letter from becoming a larger problem.
Help built into the HECM program
HUD has created several tools for borrowers who fall behind on property charges. Not every borrower qualifies, and servicers apply the rules, so ask for answers in writing.
Repayment plans for property charges
Servicers can evaluate a borrower who is behind on taxes or insurance for a repayment plan, which can spread the shortfall over time. Under HUD's servicing guidance, the plan can be long enough to make catching up realistic for many households. Ask your servicer what terms it can offer and what documents it needs.
Extensions for older, seriously ill borrowers
HUD guidance includes an at-risk extension that can let a servicer delay foreclosure when a borrower in property charge default is older and the borrower or a household member has a critical health circumstance. The details and eligibility rules change over time, so ask the servicer directly whether it applies.
Counselors who know reverse mortgages
HUD-approved housing counseling agencies include counselors who work specifically with HECM borrowers, and they can help you understand letters from the servicer, apply for local tax or utility assistance and talk to the servicer with you. The CFPB's reverse mortgage resources explain these programs in plain terms. A Nevada elder law or real estate attorney can review any due-and-payable notice.
If a Sale Is the Path You Choose
Send the address and we will look at the property, the neighborhood and whatever you decide to share. Then we reach out with a few questions and explain any offer in writing, at your pace.
Talking with us never takes other doors off the table. You can still speak with your loan servicer, a HUD-approved housing counselor or a Nevada attorney, and we would encourage it. Prefer a voice? The TALK TO ALEX button rings our line.
What selling looks like once the loan is due
Some borrowers, often with family, decide the home no longer fits, especially after a move into assisted living or when taxes and insurance have become unaffordable. Selling pays off the HECM through escrow. HUD rules generally cap what is owed on an FHA-insured HECM at the lesser of the loan balance or a percentage of the home's appraised value, which is part of what makes these loans non-recourse. Ask the servicer for a written payoff and how that rule applies to your sale, since the numbers drive everything else.
We are a cash home buyer. We do not negotiate with reverse mortgage servicers, apply for extensions or provide any service to keep the home. What we can do is make a written as-is offer, with nothing to fix or clean up and no agent's fee, and close on a date that works for the family, within whatever time the servicer allows.
- Request the due-and-payable notice details and a written payoff from the servicer.
- Meet with a HUD-approved HECM counselor about repayment plans or extensions.
- If selling is the better fit, compare a listing estimate with a written cash offer.
- Have a Nevada attorney review the contract, and involve family or a trusted advisor.
- Confirm escrow will pay the servicer directly at closing.
Taking extra care with older homeowners
Reverse mortgage borrowers are frequent targets of pressure tactics. A good rule is that no one should be asked to sign anything at the first meeting, and a trusted family member, counselor or attorney should see the paperwork. Nevada's foreclosure purchaser rules under NRS 645F apply when a home has a recorded notice of default, and fraud or deceit by a buyer can let the homeowner rescind the sale. That protection matters, but a careful review before signing matters more.
Related situations and places
Reverse mortgage borrowers in Henderson's established neighborhoods and Summerlin's age-qualified communities and older villages often also live with an association, so it helps to understand how an unpaid HOA assessment becomes a lien. If the home is worth less than the balance, our page on homes worth less than what is owed covers that math. For the steps of a sale, read how we buy a house for cash, start to finish, and for scheduling questions, browse frequently asked questions about closing dates and costs. Families who want to talk through a situation without any commitment can send us a short note about the property.
Fair Questions, Plain Answers
Can a reverse mortgage really be foreclosed while I live in the home?
Yes, in certain situations. If property taxes or homeowners insurance go unpaid and the servicer cannot cover them from loan funds, HUD rules allow the loan to be called due and payable with HUD approval. Repayment plans and other options may be available first, so contact the servicer and a HUD-approved HECM counselor as soon as a letter arrives.
Is this page about a reverse mortgage after a death?
No. This page covers defaults while the borrower is living, such as unpaid taxes, missing insurance or not occupying the home. When the last borrower dies, heirs and eligible non-borrowing spouses deal with a separate set of HUD rules. A HECM counselor or an estate attorney is the right first call in that case.
Will you contact the reverse mortgage servicer for us?
No. We are a buyer, not a consultant or negotiator. If you decide to sell, the title and escrow company handles the payoff request and pays the servicer at closing from the sale proceeds. For anything involving repayment plans or extensions, work directly with the servicer and a HUD-approved counselor.